Saturday, February 19, 2011

Adam Smith no ideologue

“Adam Smith, for all the considerable flaws in his thinking, wasn’t stupid. He understood the class conflict inherent to the economic system he was describing.

What are the common wages of labour, depends everywhere upon the contract usually made between those two parties, whose interests are by no means the same. The workmen desire to get as much, the masters to give as little as possible. The former are disposed to combine in order to raise, the latter in order to lower the wages of labour.

He also understood that this wasn’t an even match-up. Under 18th Century capitalism, not only were most workers living hand to mouth, organizing was expressly forbidden by law. It’s pretty clear that Smith thought this was an unfair state of affairs.It is not, however, difficult to foresee which of the two parties must, upon all ordinary occasions, have the advantage in the dispute, and force the other into a compliance with their terms. The masters, being fewer in number, can combine much more easily; and the law, besides, authorizes, or at least does not prohibit their combinations, while it prohibits those of the workmen. We have no acts of parliament against combining to lower the price of work; but many against combining to raise it. In all such disputes the masters can hold out much longer. A landlord, a farmer, a master manufacturer, a merchant, though they did not employ a single workman, could generally live a year or two upon the stocks which they have already acquired. Many workmen could not subsist a week, few could subsist a month, and scarce any a year without employment. In the long run the workman may be as necessary to his master as his master is to him; but the necessity is not so immediate.

Of course, workers organized and fought anyway, were beaten, killed, thrown in prison, and vilified in the capitalist press. But their “masters,” the owners of the factories, organized themselves as well. These organizations operated with the consent of the law to do what it is masters always do, the very aspect that unites them as a class: lower the wages of the workers. But this operated out of sight.”

CommentFollow the link and read the rest of Gavin Mueller’s case. Gavin’s approach is from a left perspective (makes a change from the usual right wing extremist approach that invents myths about Smith being a believer in laissez-faire, pure free market economics, and mystical ‘invisible hands (of god, etc.,).

However, Adam Smith is much more nuanced a thinker than Gavin Mueller appreciates from the Left and some anarcho-Libertarians believe from the Right.

Adam Smith, as a philosopher wrote that he “observed, but did nothing”, somewhat at odds with Marx and Engels who believed the purpose of philosophy was ‘to change the world’. In Smith’s case he spoke out as Gavin Mueller correctly observes (and quotes from Wealth Of Nations), but he also spoke out in favour of the ‘distinction of ranks’ in society – Smith above all else considered social stability an important element for the growing opulence of the majority of the populations, who ‘feed’ and ‘clothe’ all and he was more than suspicious of the ‘Man of System’ who believes he can, through his schemes, move people like wooden pieces on a chess board, when in fact people have minds of their own and move under their own volition.

I should also point out, respectfully of course, that ‘capitalism’ was a long way from 18th-century ‘commerce’ – the word was not invented in English until Thackeray’s novel, The Newcomes (1854).

The Guilds and Incorporated Towns long preceded Adam Smith’s critique of their monopolizing behaviours, and essentially were legal bodies of artisans and ‘skilled’ tradesmen that restricted new entrants to their trades, fixed (high) prices and exploited consumers (sound familiar to trade unionists and professional bodies?).

The Combination Acts were part of a raft of restrictive laws, aimed at distorting the economy on behalf of mercantile interests. Tariffs and prohibitions were part of them too (supported as much by the workers as by the merchants and manufacturers – and farmer interests). Not surprisingly, modern trade unions also support trade restrictions – even prohibitions too. The ‘brotherhood of man’ extends up to the nations frontier, but no further.

Mercantile political economy lives on. Men and women of ‘system’ still rule the world. Gavin Mueller should contemplate what Adam Smith might have said about that (despite the massive opulence enjoyed by the majority of workers in North America and Western Europe – and soon in China, India, and Brazil, but not, alas, in Venezuela, Cuba, and North Korea.